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Mohan Padmanabhan

Kolkata , April 11

TOBACCO farmers of Andhra Pradesh, caught in the vice-like grip of involuntary excess production (overshooting the annual crop size stipulated by the Tobacco Board) indicate an indirect crop loss of nearly 20 million kg on account of contraband cigarettes entering through the porous land borders with Nepal and Bangladesh. The other problem cited by them is the growing instability vis-à-vis excise on cigarettes.

They fear that the increasingly large volumes of such cigarettes coming from across the borders will gradually kill the domestic industry and, consequently, severely affect the livelihood of the five million tobacco farmers, mainly in Andhra Pradesh and Karnataka.

The spurt in cigarette smuggling, it is pointed out, also means a significant loss of revenue for the Government, estimated at around Rs 2,000 crore annually.

Talking to Business Line over phone from Hyderabad recently, Mr P. Chengal Reddy, Honorary Chairman of the Federation of Farmers' Associations, Andhra Pradesh, said there was a huge differential in prices between duty-paid cigarettes and duty-not-paid stock, owing to the steep excise rates on cigarettes in India.

He felt this will significantly dampen the offtake of cigarette tobaccos, hurting farmers the most.

Mr Reddy said the tobacco farmers will also not benefit from the manufacture of cigarettes by MNCs in 100 per cent export oriented units (EOUs), since it is common knowledge that none of the cigarette MNCs uses any Indian tobacco in its blends.

He informed that the federation has already urged the UPA Government not to grant permission to any unit to manufacture cigarettes in 100 per cent EOUs in EPZs.

According to Mr Gadde Sivaram Prasad, General Secretary, Tobacco Growers Welfare Association, Guntur, at pre-Budget meetings with senior government officials, the farmers of Andhra Pradesh had sought stability in excise rates on cigarettes, but instead, the Government has chosen to effect a steep hike in excise on cigarettes in this Budget, which in turn would be passed on to consumers, resulting in reduced consumption.

According to Mr Garikapati Seetharamaiah, President, Nellore and Prakaksam Districts Tobacco Growers Association, while the Finance Minister has given a permanent lease of life to the National Calamity Fund, the tobacco farmers of Andhra Pradesh themselves were now facing a calamity in the form of shrinking auction prices and diminishing marketing opportunities, resulting in lower per hectare productivity with reduced incomes.

And to top it all, "there are now ill-advised demands from various quarters for allowing foreign cigarette MNCs to participate in our tobacco auctions," he pointed out.

Mr Prasad, who put the current year's crop size at around 160 million kg, said the Government needed to do something urgently to help liquidate stocks.

Pointing out that one acre of tobacco grown results in some 250 mandays in terms of employment, he said the crop size (especially the FCV variety) cannot be programmed to fit the Tobacco Board-stipulated size, as the crop was dependant on vagaries of nature, curing patterns and other farm conditions.

Describing tobacco as a highly regulated crop, he said no additional capacities are sanctioned for the cigarette industry, and this directly impacts the farm situation. Only some 50 per cent of the installed capacity of the manufacturers was now being used, proving highly detrimental to the tobacco farmers, who cannot so easily switch over to alternative crops, given the prevailing soil conditions.

According to him, some 2 lakh hectares were now under tobacco cultivation in Andhra Pradesh and Karnataka accounting for a mere 0.3 per cent of the total arable land.

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